G20 partners urging quick euro solution: Flaherty

Reuters Staff

3 Min Read

<p>Canada's Finance Minister Jim Flaherty speaks during Question Period in the House of Commons on Parliament Hill in Ottawa December 1, 2011. REUTERS/Chris Wattie</p>

OTTAWA (Reuters) - Finance Minister Jim Flaherty denied a report on Wednesday that there was a G20 agreement to create a $600 billion lending facility for Europe through the International Monetary Fund.

Flaherty, who opposes boosting IMF resources for the purpose of rescuing the euro zone, did say that he had discussed the crisis with some like-minded G20 colleagues and that they had conveyed their joint message to their European counterparts.

“There have been discussions for some weeks about IMF resources and the possibility of increasing IMF resources,” Flaherty told reporters in Ottawa.

“There are some nuances to the positions of some countries, but I can assure you there’s been no commitment by the G20 to any specific resourcing plan,” he said.

Japan’s Nikkei newspaper reported in its online edition that the Group of 20 advanced and emerging economies planned to put together such a facility and that key members such as Japan, the United States and China would contribute to the facility.

An IMF spokesman also denied the report.

Ottawa argues that European countries have sufficient resources and that the IMF should use the funds to help poor nations. Canada has no interest in contributing to a euro zone rescue through the IMF, he said.

There have been “discussions for some weeks about IMF resources and the possibility of increasing IMF resources. Our position remains that the euro zone members need to use their own resources in the first instance to address their issues,” he said.

Flaherty also said there was a “legitimate concern” that Canada could experience another credit crunch if the European crisis deteriorates, even though bank exposure to debt-ridden European countries is “controllable”.

Hopes are pinned on a European Union summit on Friday for a breakthrough deal that can restore market confidence and prevent the sovereign debt crisis from spiraling out of control.

But as France and Germany detailed their plan to amend the EU treaty to force countries to have more fiscal discipline, a senior German official dampened those hopes by saying he was pessimistic about reaching a deal.